TRADE relations between Western Australia and China have been boosted by this week’s announcement by BHP Billiton of a 25-year $11.6 billion ($US9 billion) deal with four of China’s largest steel producers.
TRADE relations between Western Australia and China have been boosted by this week’s announcement by BHP Billiton of a 25-year $11.6 billion ($US9 billion) deal with four of China’s largest steel producers.
Iron ore and liquid natural gas (LNG), among other commodities, continue to provide a firm foundation for significant trade and business relationships with China, according to State Development Minister Clive Brown, who flew to Beijing to witness the signing of the deal.
BHP Billiton CEO Chip Goodyear said the joint venture would secure a partnership for BHP Billiton with a group of Chinese steel makers ensuring long-term security of supply.
Rivals Rio Tinto and Brazilian company CVRD had, in recent years, secured iron ore supply deals in China with Baosteel – China’s largest steel producer.
Mr Goodyear said the deal would: “Cement an ongoing economic partnership between BHP Billiton as a leading supplier of raw materials and China as a major industrial nation.
“We expect the relationship between China and BHP Billiton will provide further opportunities for our other businesses, notably metallurgical coal and manganese,” he said.
While in Perth recently, Mr Goodyear signalled the mining giant’s confidence, outlining plans to increase production of its Pilbara iron ore operations to about 145 million tonnes per annum by the end of 2007.
BHP Billiton had already indicated plans to produce up to 100 Mtpa by the end of 2004 and was undertaking a study assessing the feasibility of increasing production to 150 Mtpa.
On the back of burgeoning Chinese demand for iron ore, BHP Billiton and Rio Tinto last year announced they would fast track their respective Pilbara iron ore expansions.
In announcing the Wheelarra deal, BHP Billiton will double its total sales to the Chinese mills in 2004 and immediately begin shipping an additional four to six Mtpa.
BHP Billiton has spent $US351 million expanding port and rail facilities in Port Hedland to accommodate its Pilbara expansion plans.
Hamersley Iron, owned by Rio Tinto, announced its plan to spend $920 million expanding its iron ore production, while Robe River (53 per cent Rio Tinto) announced it would spend $135 million at its West Angeles operations to increase output by 25 per cent.
Smaller producers across the State such as Mt Gibson and Portman Mining have also increased iron ore production.
China’s iron ore imports have almost doubled since 2001 (to 148mt in 2003) and China is set to overtake Japan as the world’s largest importer of iron ore.
The Australian Bureau of Agriculture and Resource Economics (ABARE) has forecast a rise in Australian iron ore exports by 12 per cent, to 203mt, in 2003-04.
However, ABARE has forecast the value of these exports will increase by only 4 per cent to about $5.5 billion as the appreciation of the Australian dollar is expected to offset the higher US dollar prices and increased export volumes.
The latest figures from ABARE forecast total minerals and energy exports to be $52.5 billion in 2003-04 and $58.3 billion in 2004-5. Export earnings are forecast to increase in 2004-05 for such commodities as iron ore, coal – which will feed China’s demand – along with alumina, aluminium, nickel and base metals such as copper, lead and zinc.
“We expect the relationship between China and BHP Billiton will provide further opportunities for our other businesses, notably metallurgical coal and manganese,.”
- Chip Goodyear
